Will Warner Bros. And HBO Max Forever Change the Way We Watch Films?

In March 2020, when MGM postponed the release of the 25th James Bond movie, No Time to Die, by six months because of the global spread of the COVID-19 virus, many thought the studio was being a touch hasty. The growing threat of the coronavirus had not fully hit the general public, and many in the industry had assumed things would quiet down by summer. That obviously didn’t happen, and soon, many other films would follow in No Time to Die’s footsteps. Throughout the rest of 2020, as cinemas closed en masse and social distancing measures became the norm, it became abundantly clear that things wouldn’t be returning to normal any time soon. Indeed, normalcy in the entertainment industry may never come back.

To plug the gap, studios resorted to a number of hastily executed contingency plans: the majority of major releases were postponed, with some pushed back well into 2022, and many titles were given streaming or VOD releases. Yet, even as these changes continued, the announcement made by Warner Bros. still shook Hollywood to its core. One of the biggest and longest-running companies in the industry, Warner Bros. revealed they would simultaneously release all of their 2021 properties in theaters and on their newly launched streaming service HBO Max. This was no mean feat for a company that has much-hyped titles like Mortal Kombat, The Suicide Squad, and the fourth Matrix film on its slate for the next twelve months. It wasn’t a popular decision with filmmakers like Warner Bros. favorite Christopher Nolan, and the suddenness of the change seemed to leave a lot of industry stalwarts in the dust. Legendary, the production company behind Godzilla vs. Kong and Dune, publicly expressed their disapproval of the decision.

Despite all the controversy, it’s not hard to see why Warner Bros. felt obligated to make such a startling decision. Long before this pandemic, the issue of dwindling cinema attendance hung over studios’ heads. Moviegoers were increasingly turning away from the traditional theatrical experience long before COVID-19 rendered it impossible. According to a study that spanned from November 2018 to June 2020, just 14% of polled adults said that they “strongly preferred” seeing a film for the first time in a theater. 36% said they’d rather stream a film at home than visit a cinema for new releases. With plans for an ambitious original programming slate, HBO Max, like many of its fellow streaming services, seemed primed to shift their practices in tandem with these changing tastes, albeit more slowly than what ended up taking place.

On January 27, 2021, Verge was reporting HBO Max had subscriber numbers of 41 million, a milestone the company didn’t expect to hit for two more years and a major increase from only three months prior. They thanked their decision to release Wonder Woman 1984 on the platform on Christmas Day for the sharp rise in active users. Whether the simultaneous release move is a one-off gimmick or a long-term solution, it’s done its job in hooking interested audiences.

The reliability of revenue from streaming remains questionable. It took until this year for Netflix, the undisputed giant of streaming, to break even with its cash flow. Audiences may be moving towards streaming as their ideal viewing experience, but its financial guarantees are questionable, even for major conglomerates like WarnerMedia (which is owned by AT&T). Yet, in the current circumstances, a little bit of money is clearly better than no money at all, and indeed, the short-term losses may be worth it if HBO Max becomes a default mode of viewing entertainment for millions of viewers.

The future of cinema also has another elephant in the room that it must confront. In 2019, the United States Department of Justice Antitrust Division filed a motion for a court order to terminate the Paramount Decrees. This landmark Supreme Court case declared that studios could not own their own theater chains in order to hold exclusivity rights over which films they screened. During the first few decades of Hollywood, the studios owned their own cinemas, and this model of vertical integration defined their distribution models. The court granted the Department of Justice’s motion to lift the decrees in August 2020, starting a two-year sunset termination period. Theoretically, we could return to the days of studios buying up theater chains to exclusively screen their IPs. It’s certainly a fear that many independent theater owners and filmmakers have. If streaming and exclusive VOD releases are to become the norm, surely it benefits a studio to have its own chain of theaters in its back pocket to keep the competition down? It doesn’t seem impossible in the current market to imagine the WarnerMedia chain of cinemas exclusively screening their films just before or as they premiere on HBO Max. Indeed, it’s not hard to foresee any number of studios or streaming services going down this route. Netflix, for example, has been buying cinemas for a while now.

Scott Mendelson, a journalist and box office analyst for Forbes, is more optimistic about the future of cinemas, explained in a conversation with Uproxx.

“I do think audiences will return to theaters once the dust settles, if only with even more emphasis than before on big-budget, franchise-friendly, ‘gotta see this in theaters’ tentpoles over essentially everything else,” he said.

Still, he is cautious about the future that reliance on streaming suggests for the long-term viability of the current studio system.

“The studios tripling down on streaming platforms as their future creates another grim possibility: that, even if audiences do show up for theaters, the once theatrically viable franchise flicks may be more valuable to the studios as loss leaders for the streaming platforms than as (on an individual basis) theatrical releases. There’s still no comparison to the revenue potential of a successful global theatrical release versus any other income stream for a ‘big’ movie. But if streaming is ‘the future,’ that may not matter for all but the very biggest titles.”

The HBO Max release model is a genie that will not easily go back in the bottle after 2021. It’s the natural conclusion to an industry struggling to deal with the rapidly changing realities of modern entertainment. What many of us thought would happen in seven to ten years did so in a matter of months, exacerbated by an unprecedented worldwide pandemic whose consequences we will feel for decades to come.

And others are following in their footsteps. Paramount recently announced that their most expensive tentpole blockbusters, including Mission: Impossible 7 and Top Gun: Maverick, will drop on-demand for rental on their streaming service a mere 45 days after they premiere in theaters. Even if audiences scramble to return to the cinema, the traditional release model is, if not dead, then in serious trouble.

For now, the question of HBO Max is less one of audience desires and more of necessity. Studios can’t stall any longer. They can’t hold back their release slate for an indefinite period because the normal we all hope to return to is arguably non-existent. The cinematic business model may not have caught up to the general public’s shift in viewing tastes, but they’re keen to play catch-up now, and not just because it’s the only option they have. It remains to be seen if, say, The Suicide Squad or Dune can be a success as a streaming title, but our understanding of what it means for a film to succeed is changing too.